According to SFAS 141R, a business combination is a transaction or other event in which,

d) an acquirer obtains control of one or more businesses

In the acquisition method, contingent consideration obligations are considered

b) a negotiated component of the fair value consideration transferred

When a bargain purchase occurs and the net amount of the fair values of the separately identified assets and liabilities acquired exceed the fair value of the consideration transferred:

b) a gain on bargain purchase is recognized at the acquisition date

Powell Company buys all of the outstanding common shares of South Bay Co. on Jan 1, 2009, for 1,500,000. If a contingent cash payment is a portion of the negotiated fair value of this acquisition, how will changes in the revaluation of the contingent performance payment affect the future finanacial statements

c) Change from the revaluation are reported as prior period adjustments and affect retained earnings

Some Subsidiaries already have goodwill oin their books when they are acquired by a parent company. This preexisting Goodwill

d)Should be capitalized in the case of a bargain purchase

Not sure

Not Sure

Many Aquired companies have significant research and development (R&D) projects ongoing. This in-process R&D

d) Should be recognized as an asset

Which of the following is the best theoretical justification for consolidated financial statements?

b)In form the companies are separate; in substance they are one entity

The worksheet that is sed to consolidate the information for the parent and the subsidiary when both companies maintain thier individual incorporation and records(not Sure)

e) is prepared in order to develop the figures necessary for the consolidated financial statements

When a dissolution takes place,

b) all account balances are physically consolidated in the parent companies records

In chapters 2 and 3, the authors focus exclusivelt on combinations

e) that result in complete ownership by the acquirer

Which one of the following accounts would not appear on the consolidated financial statements at the end of the first fiscal period of the combination

c) Investment in Sub'y

Which of the following internal record-keeping methods can a parent choose to account for its investment in a sub'y

c) initial value, equity, or partial equity

For the consolidating worksheet for a parent company and a sub'y acquired at the beginning of the current year

e)no amortization of the excess of fair value over book value is ever necessary

Under the partial equity method, the parent recognizes income when

e) it is earned by the sub'y

How does the partial equity method differ from the equity method?

e) under the partial equity method, the balance in the investment account is not decreased by the amortization of the excess of acquisition fair value over book value of specific assets and liabilities

Under the initial value method, when accounting for an investment in a sub'y

a) dividends received from the sub'y decrease the investment account

According to SFAS 142, which of the following statements is true?

b) goodwill recognized in consolidation must be expensed in the period of aquisition

one company acquires another company in a combination accounted for as an acquisition. The parent company decides to apply the initial value method in accounting for the combination. What is one reason the acquiring company might have made this decision?

b) it is relatively easy to apply during the year

Push-down accounting involves the

a) impact of the acquisition on the sub'y financial records

Which one of the following is not a category of intangible assets?

e) Customer-related intangible assets

Which one of the following varies depending on the internal record-keeping method the parent chooses to use for its investment in the sub'y

a) the amount of consolidated net income

Direct combination costs and stock issuance costs are often incurred in the process of making a controlling investment in another company. How should those costs be accounted for in an acquisition transaction?